Figure Out How Much Your Scrap Gold Is Worth

If you have a bunch of broken gold chains and necklaces and want to try selling them to a jewelry store, it’s important to know how much they’re worth first. Here’s how to calculate their value like the pros do.

1. Weigh it with a gram scale.
2. Get today’s price of gold from a place like Kitco.
3. Divide that price by 31.1 to get the gram weight. (The price of gold is listed in troy ounces, which is 31.1 grams)
4. Divide the karat by 24
5. Multiply the result of step 4 by the result of step 3 by the result of step 1.
6. Congrats! Now you know how much your piece of gold is worth if it was melted down.

Armed with this information you’ll be a lot better equipped to get a good price when you comparison shop selling your gold at several different jewelry stores.

Because then people wouldn’t understand why the calculations were done that way. Breaking it down into steps shows you why you did each calculation. Though I think it’s sad that people can’t figure this out on their own.

Keep in mind that this is the value of the gold, at the prevailing market rates for bullion. You’ll never get this rate from a buyer. An ounce of random gold jewelry will be less than an 1 ounce gold coin. Kitco is currently discounting their buy price for scrap 24K gold by 9% (and you have to be in precious metal business to sell to them, no individuals).

The term “scrap gold” just kills me…gold is never “scrap” – which is a term generally analogous to junk you may as well just throw away. The Cash for Gold guys invented that term to try to get people to think of gold as something they don’t want around anymore…like it’s a nuisance to have a gold necklace you don’t intend to wear again.

…when you comparison shop selling your gold at several different jewelry stores…

…then you’ll be able to see which store will give you the highest amount, without purchasing an accurate gram scale and wasting time with a complicated formula that may have no bearing on the prices offered by the refiner that the jewelry store in question favors.

I work for a wholesale jeweler, and here’s a few things I can tell you about what happens when you sell your gold.

When you sell your gold to a jewelry / pawn shop, they usually sell your gold to a wholesale jeweler. The wholesale jeweler buys gold from many dealers and in turn sells all their gold to a smelter. The smelter will melt down the gold and trade it directly on the various gold exchanges.

When the smelter melts down gold they’ll pay the wholesale jewelers 97% – 98% of its market value as the melting process results in a 2% – 3% waste. The wholesale jeweler makes a little bit of money when buying from retail dealers… but not much… we’re talking around 5%. So, retail jewelers get 92% market “spot” value when they SELL your gold. Retail jewelers usually need to make around 20% – 30% profit on your gold. In effect, your can reasonably expect around 60% – 70% of market “spot” price for your gold.

You may be asking “why can’t I just sell to the smelter directly?” That would get you the most value for your money… but most smelters won’t even talk to you unless you are sending them 5lbs – 10lbs of gold PER WEEK! That is the same reason most retail jewelers sell their gold to a wholesale dealer… their volume of gold just isn’t enough to deal directly with the smelter.